Yesterday Ahmadinejad caused a little bit of a stir by 'pre-announcing' that Iran was about to announce something big regarding its nuclear development program. You can call us cynical, but we wonder if he might be trying to draw some attention away from this:
The Rial took a big hit this past week, dropping 8% against the Dollar. If we look back to the beginning of 2011, the USDIRR is up 18% (meaning the Rial has weakened) and is the 4th worst performing currency over that time frame. Here's the bottom ten:
For two of the three currencies that have performed worse, Belarus is going though hyperinflation and Syria is in the midst of a revolt with some economic sanctions thrown in. Of course, Iran is dealing with their own sanctions although that hasn't (yet) affected their ability to find buyers for their oil.
Here are some more details from BusinessWeek:
More trade with Iran may be blocked if a U.S. Senate Banking Committee bill approved Feb. 2 becomes law, making U.S. companies responsible for the actions of their foreign units when dealing with Iran. A spokesman for committee chairman Tim Johnson, a South Dakota Democrat, declined to comment.
While the Japanese government said last month it would curb imports from Iran, India’s Foreign Secretary Ranjan Mathai said Jan. 17 his country won’t. China, the Persian Gulf country’s largest customer, needs the oil for development, Vice Foreign Minister Zhai Jun told reporters Jan. 11.
Everyone knows that Iran has plenty of oil, but they have to import just about everything else that they consume and one of the major imports is wheat. Fortunately for the Iranians, wheat futures (when priced in dollars) haven't gone up in recent times and are actually down over 20% since the beginning of 2011. However when priced in Rials wheat is basically flat. Here's the comparison chart:
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| Click here to go to the live chart. |
Here's some commentary regarding Iranian imports of food from a few days ago courtesy of Reuters:
New financial sanctions imposed since the beginning of this year to punish Tehran over its nuclear programme have ended up playing havoc with Iran's ability to buy imports and receive payment for key food items.
The sanctions have drastically cut its ability to obtain euro and dollar denominated financing, forcing Tehran to find alternative ways to pay for its imports.
Traders believed the Iranian government had used companies based in Switzerland capable of financing themselves in Asia, and used yen-based contracts to finance the 200,000-tonne deal.
A fall in maize supplies from major exporter Ukraine due to sanction-related payment problems prompted Iranian animal feed makers to turn to wheat, reducing volume for food and compelling the Islamic Republic to turn to the world market.
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